Newsletter

HEA rate change nearly done

Most customers will save under new structure

Homer Electric Association customers will likely see a change on their electric bills next month.

The Regulatory Commission of Alaska recently issued an order tentatively approving HEA's plan to restructure rates. If given final approval, which HEA expects to happen by the end of the month, the changes would go into place Jan. 1.

Overall, the cost for an average residential customer using 630 kilowatt hours should go down by about $9.41, according to HEA's statement about the RCA's order. That calculation includes an increase in some areas, such as the monthly residential customer charge, and a decrease in others, including the overall energy rate.

A minimum energy charge, equal to the cost of 150 kilowatt hours, will be added for residential customers. Essentially, that means that members will be charged for using 150 kilowatt hours of energy, even if they use less than that amount. Members who have an alternative energy source and are participating in HEA's net metering program will be exempt from that charge.

Customers will also see a $4 increase in the monthly residential customer charge, bringing it up to $11.

HEA spokesman Joe Gallagher has said that the changes were an effort to more fairly recover the fixed costs of providing electric services. Those costs include billing, metering, customer service, poles, wires, substations, generation, transmission lines and insurance. The customer charge is limited to the covering the costs associated with metering, accounting and billing, Gallagher has said.

If approved, the overall energy rate next year will be 16.917 cents per kilowatt hour. That's because the base rate will go down almost three cents to 11.814 cents per kilowatt hour, and a cost of power adjustment (COPA) will replace the current wholesale power cost adjustment (WPCA) line on the bill. The WPCA line reflects some, but not all, fuel costs, Gallagher said. Starting in January, the new COPA will be 5.103 cents per kilowatt hour. Currently, the WPCA is 4.424 cents per kilowatt hour. Gallagher said the higher figure is because the new calculation includes all fuel costs, instead of some in the WPCA and some in the base rate. That is still a pass-along cost from energy provider Chugach Electric Association.

The change also means that the separate rate for South Kachemak Bay customers will be discontinued, and those customers will be rolled into the regular residential rates.

In addition to the changes for residential customers, commercial rates will also change see changes, including a flat rate per kilowatt hour rather than one that depends on how many kilowatts are used.

Not everyone will fare as well with the new structure. The reconnection fee for HEA members who disconnect and reconnect to the same meter in a 12-month period will increase significantly, going from $45 to $107. Those customers will also be billed the minimum energy charge and customer service charge for the lapse in service.

According to a statement from HEA, the minimum monthly bill for a residential customer will now be $32.72.

The regulatory commission capped the combined minimum energy charge and customer service charge at $38.38. According to the stipulation filed by Homer Electric, Land's End Acquisition Corporation and the state of Alaska Attorney General's office, that number is the average cost of service to a residential customer for HEA.

Lands End and the attorney general participated in the rate-setting process after filing to intervene last spring. Lands End had questioned the changes and their neccesity when joining the process.

"Participation of Lands End and the Attorney General allowed for HEA to confer about the rate setting process and explain the new rate structure in depth," Gallagher said.

Together, the three parties devised some changes to the original plan. Those included a slightly lower revenue requirement, a minimum energy charge cap, and a date for the next HEA rate case filing, Gallagher said.

The plan was originally submitted in November 2010, and tentatively approved Dec. 9. Final approval is contingent on HEA filing certain documents, and is expected by the end of 2011. The change is not permanent.

"As part of the stipulation between HEA and the Attorney General's office HEA must file a new Rate Case no later than October 31, 2015," Gallagher said in an email.